This appeal is directed against the Judgment and decree passed by the IAdditional Senior Civil Judge, Mangalore (‘Trial Court’ for short) in O.S.No.88/2001.

2. For the sake of convenience, the parties are referred to as per their ranking before the Trial Court.

3. Facts in brief are:

The plaintiff filed a suit in O.S.No.88/2001 before the trial Court against the defendants for recovery of a sum of Rs.68,06,495/contending that the first and second defendants borrowed a sum of Rs.50,00,000/at their Mangalore branch on 08.10.1996 by executing ‘on demand promissory note’ promising to repay the said loan with interest at 26.5% per annum compounded monthly; that the defendant Nos.3 to 7 stood as guarantors and executed letters of guarantee and the defendant Nos.1 to 6 had also executed an agreement in their individual capacity and also partners, representing the 7th defendant M/s. Regency Builders and at the time of availing the loan, the second defendant had mortgaged certain immovable property as security for the loan. Subsequently, the said security was replaced by mortgaging ‘A’ schedule property belonging to the defendant No.7 in which the defendant Nos.1 to 6 were partners and deposited the title deeds with the plaintiff on 26.02.1999. The defendant Nos.1, 2 and 4 filed their written statements. However, the defendant Nos.3, 5, 6 and 7 though appeared through their counsel, did not file the written statement.

4. On the basis of the pleadings, the following issues were framed by the trial Court:

1. Whether the plaintiffs prove that defendants No.1 and 2 borrowed a sum of Rs.50,00,000/from the plaintiff on 08.10.1996 and executed the suit on demand promissory note agreeing to repay the same with interest at 26.5% p.a.?

2. Whether the defendants No.3 to 7 stood as guarantors for the suit loan and executed the letter of guarantee in their individual capacity and also as partners of 7th defendant firm?

3. Whether the plaintiffs prove that the 2nd defendant has created equitable mortgage by deposit of title deeds in respect of the plaint schedule property as security towards the suit loan?

4. Whether the defendants are jointly and severally liable to pay the suit claim?

5. Whether the plaintiffs are entitled for a Judgment and decree as sought for?

6. To what order or decree?

ADDITIONAL ISSUES:

1. Whether the plaintiff proves that the defendants No.2 and 4 also are liable to pay the suit claim?

2. Whether the plaintiff proves that the plaint “A” schedule property is mortgaged by the defendants as against the loan dues?

5. The plaintiff company examined its Submanager as PW 1 and got marked the documents, Ex.P1 to Ex.P23. The defendant No.2 was examined as DW 1 and no documents were marked.

6. After framing the issues as aforesaid and considering the evidence on record, the trial Court decreed the suit, directing the defendants to pay a sum of Rs.68,06,495/with interest at the rate of 26.5% per annum from the date of filing of the suit till the date of realization. Aggrieved by the same, defendant Nos.2 and 4 are in appeal.

7. The learned counsel for the defendant Nos.2 and 4 primarily argued on two grounds. Firstly, the Court below had no jurisdiction to entertain the suit to sue much against the bar provided under the Karnataka Money Lenders Act, 1961 (‘Act’ for short). Elaborating the arguments on this point, the learned counsel invited the attention of this Court to Section 11 of the Act to contend that after the expiry of 6 months from the date of which the Act came into force, no Court shall pass a decree in favour of a money lender in any suit to which this Act applies, filed by a money lender. It is the contention of the learned counsel that the plaintiff is a money lender in terms of the Act. In order to establish the same, the definition clause of Section 2(10) of the Act was referred to, interalia referring to Section 2(9) of the Act which defines “loan”. Thus, it was contended that in view of the specific bar under the provisions